Monday, July 12, 2010
Making the right decisions
There has been recent discussions regarding whether or not Carrefour will remain in South-East Asia. Reports were published that suggested that Carrefour would be pulling out of all markets in which it is not number one - namely, Thailand, Malaysia and Singapore. While those initial reports have since been denied by Carrefour it still raises interesting questions regarding the motivation behind the decisions that businesses make. Standard corporate finance theory dictates that projects that generate positive net present value are worthwhile undertaking as they, by definition, add to the bottom-line; however, businesses sometimes ignore rational business thought and make decisions purely based on visions of industry domination and expansion. While it is understood that Carrefour has made this particular decision based on economic reasons (Carrefour has chosen to focus on the Indian market, for example, and may be using the proceeds from the sale of their South-East Asian assets to fund that expansion), are there examples of companies readily available that have made decisions not based on the underlying economics but rather a visionary target?